Question

Bob placed $15,000 in a safe at the start of 1970. By 1980, how will the...

Bob placed $15,000 in a safe at the start of 1970. By 1980, how will the value of Bob's $15,000 compare to its value in 1970?
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The value of $15,000 will be much higher as there was deflation in the 1970s.
The value of $15,000 will be about the same as in 1970 because inflation was low in the 1970s.
The value of $15,000 will be higher because inflation was high in the 1970s.
The value of $15,000 will be much lower because inflation was very high in the 1970s.

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Answer #1

As per the question bob placed dollar 15000 in safe at the start of 1970, but if we compare the value of same dollar 15000 in the year 1980. We find the value of the money decreased as because over a period of ten year due to inflation the general price level has increased. So value of money decreased.So if we compare the general price level of 1970 with 1980, we find that the value of money of dollar 15000 of 2017 is much higher than 2018. To conclude the value of dollar 15000 is much high as because there was deflation in the year 1970.

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